But the trust says on its website that it is to appeal against the decision.

The Trust wants to sue Policy Exchange and Denis McEoin for defamation over a pamphlet entitled The Hijacking of British Islam, which alleged extremist influences in a number of British mosques.

Mr Justice Eady said that although there were individual trustees who were charged with responsibilities and obligations in connected with activities associated with the Mosque, the trust itself was not a legal persona.

“In my judgment the lack of capacity is a fundamental problem of substance, rather than one of form, which cannot be cured by putting up individuals who do not wish to sue on their own account, as was at one stage contemplated, but to do so in a representative capacity,” he said.

“Who or what is it that they wish to represent? That is a problem quite apart from the normal difficulty associated with representative actions in the context of libel actions generally; namely, that a representative has to have the same interest as the interest of the person or persons on whose behalf the action is taken.”

He went on: “The primary question is whether ‘the trust’ or ‘it’ exists as a legal entity. Only if it does would it make sense to speak of ‘its’ reputation.

“If it does not exist, it can have no reputation. A non-corporate charity can, in a loose sense, have a good or bad reputation which might encourage or discourage people from giving it money, for example, but a loose sense is not good enough if it comes to a claim for libel.”

While Parliament had given trade unions the right to sue and be sued, it had not conferred that capacity on the claimants or on charitable trusts in general.

The trust, which was ordered to pay costs, said in a statement on its website that it intended to appeal, saying that the case on whether the Mosque had been distributing “extremist” literature, as the Policy Exchange pamphlet had claimed, was not heard.

It said the issue of charity’s capability to bring defamation claims was “a difficult legal point as no charity appears to have argued this point before”, adding: “The Trustees of the NLCMT are determined to clear their name and that of the Mosque and so have instructed their lawyers to appeal against this decision in order for the main case to be heard.

“The implications of the judgment are far reaching; not only for the Mosque but for all charities whose reputations are brought into question. The NLCMT still maintains that they were defamed by the Policy Exchange and is determined to have this case determined on its merits rather than on a legal technicality.”